In 1916 the UK government imposed an entertainments tax in the Finance (New Duties) Act ss1-2 and the Finance Act s12..
On cheaper cinema seats the flat rate of tax represented a high proportion of the ticket price. Vigorous protests by the industry led in 1920 to a reduction in the flat rates but not the abolition of the tax that was being demanded. Nonetheless, the proportion remained very high: on a 4½d ticket, the tax was 2d. Because of the stepped rates of tax, by the 1940s the tax on some popular ticket prices was greater than the net price of the ticket (eg, 2s tax on a 1s 10d admission charge).

net seat price up to

tax

1916

2d or less

½d

over 2d to 6d

1d

over 6d to 2s 6d

2d

over 2s 6d to 5s

3d

over 5s to 7s 6d

6d

over 7s 6d to 12s 6d

1s

over 12s 6d

1s + 1s for every further 10s or part thereof

1920

2d or less

nil

over 2d to 2½d

½d

over 2½d to 4d

1d

over 4d to 7d

2d

1924

6d

no tax

1s 3d

some reductions

1930

6d or less

no tax

7d

1d

8d

1½d

over 8d to 1s 1d

2d

over 1s 1d to 1s 3d

3d

over 1s 3d to 2s

4d

over 2s to 3s

6d

over 3s to 5s

9d

over 5s to 7s 6d

1s

over 7s 6d to 10s 6d

1s 6d

over 10s 6d to 15s

2s

1935

up to 3d

nil

over 3d to 5d

½d

over 5d to 6¼d

¾d

over 6¼d to 7d

1d

over 7d to 7¾d

1¼d

over 7¾d to 8¾d

2d

over 8¾d to 11d

3d

over 11d to 1s 2d

4d

over 1s 2d to 1s 5d

5d

over 1s 5d

5d + 2d for every 6d pr part of 6d over 1s 5d

1939

6d to 1s 0d

nil

over 1s 0d to 1s 3d

2d

over 1s 3d to 1s 9d

2½d

over 1s 9d to 2s

4d

over 2s

4d

1949

8d to 1s 3d

1½d

over 1s 3d to 1s 9d

5d

over 1s 9d to 2s 6d

8½d

over 2s 6d to 2s 9d

1s 1d

over 2s 9d

1s 1d

1950

8d to 1s 6d

1d

over 1s 6d to 1s 9d

4½d

over 1s 9d to 2s 6d

8d

over 2s 6d to 2s 9d

1s 0½d

over 2s 9d

1s 1d

Source: Kine Year Books

Penalties for non-payment were hefty: £50 for the exhibitor and £5 for the person admitted.
The yield for the Treasury was considerable. From 1945's gross box office revenue of £115m, $41m went on the tax, compared with the £17m taken by American film companies. Although the tax applied to other forms of entertainment, the cinema yielded 93 per cent of total tax receipts at the end of the war.
The protests continued, as did the tax. In 1949, J Arthur Rank, the most powerful figure in the UK film industry, announced that production would be cut and would cease altogether after June 1950 unless the duty was reduced. Changes were made in conjunction with the introduction of the Eady levy. The tax was finally abolished in 1960.

These stubs, showing a 2d Entertainments Tax stamp stuck to the back of the tickets, were found recently behind the skirting board in the WAAF quarters of an RAF camp in East Anglia. They appear to date from the 1940s. [Thanks to David Powell for sending them.]